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The Bank for International Settlements said stablecoins fail the three main tests of any money because they are not backed by central banks, lack sufficient guardrails against illicit usage and do not have the flexibility of funding needed to generate loans.

From: Stablecoins ‘perform poorly’ as money, central banks warn.

Now, none of these are tests of money as I understand it. Money does not need to be backed by central banks (the money in my Barclays account is not), the £50 note does not have guardrails against illicit usage and a £1 coin does not “generate” loans (although it can be used as collateral for a loan, as will Bitcoin over at JP Morgan Chase). Anyway, that’s not the point I wanted to focus on. The BIS go on to say that “due to their need to always be backed by an equivalent amount of assets, they also do not have the ‘elasticity’ that allows banks to create extra money by granting loans”. But this why stablecoins are a good thing, and the reason why banks need really tight regulation but stablecoins do not. 

 

Rosa Giovanna Barresi, a lawyer and Adjunct Professor at the University of Florence, summaries the GENIUS Act succinctly. She says the GENIUS states stablecoins are a special type of digital asset, but does not explain what a digital asset is, explicitly forbids stablecoins from earning earning interest but allows their conversion into instruments that can and “leaves so many loopholes that it will be a lawyers’ bonanza for years on end“.

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1. Access to your identity credentials (your Apple or Google or OpenAI wallet?). This is how you’ll prove the human behind the agent is really you, and authorized payments.

From: (3) Apps are Dying. Agents are Buying. | LinkedIn.

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The “how do agents pay” question remains unsolved, but several models are emerging: I think these loosely fall into four models of agentic commerce.

1. The Agent performs checkout with a human in the loop (e.g. ChatGPT asks you to add card info and click pay). 2. The Agent gets authority from a user to pay for multiple things (like card-on-file, and what Visa is doing with Intelligent Commerce) 3. The Agent has a limited ability to pay (like a virtual card or Visa’s intelligent commerce) 4. The Agent has its own wallet and funding (e.g., a stablecoin wallet)

From: (3) Apps are Dying. Agents are Buying. | LinkedIn.

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When ice was a luxurious novelty, its quality seemed to matter. Ice from Wenham Lake in Massachusetts came to be so famous for its crystalline purity that it was the only thing an English society hostess would think of using. “Everyone has the same everything in London,” William Makepeace Thackeray wrote mockingly in 1856. “You see the same coats, the same dinners, the same boiled fowls and mutton, the same cutlets, fish and cucumbers, the same lumps of Wenham Lake ice.”

From: The Ice King Was a Tudor – WSJ.

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While consumers own their data, that data is useless for most fintech purposes without the bank’s attestation. Data that is self-attested (coming directly from the consumer) would not meet the verification needs for a high-risk transaction like a payment. Banks have invested heavily in creating secure API layers to protect customer information and move away from risky methods, such as screen scraping. In my opinion, banks have every right to price their attestation services, just as consumers have the right to access their data.

From: APIs – More Banks to Follow JPM – Pricing Implications | Noyes Payments Blog.

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The American Fintech Council (AFC)

 

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JPM & AFC disagree on more topics with each deviating from Rule 1033 in some areas
JPM wants to charge Aggregators for access while the Aggregators want the data for free (Rule 1033 was on the AFC’s side)
JPM today limits access times and frequency to constrain capacity demands while the AFC wants no frequency limitations (Rule 1033 required “reasonable” constraints — with “reasonable” defined by consensus)
JPM wants to limit data use to the specific purposes authorized by the consumer while Fintechs want to use that data for other purposes (Rule 1033 is on JPM’s side)
JPM wants the AFC’s members to assume liability for data breaches and other bad outcomes while the AFC is silent on this issue
Rule 1033 left this issue open to a consensus process among all parties
The current bank contracts shift liability to the Fintechs & Aggregators

From: Is JPM’s data fee fair or unfair? – by Andrew M. Dresner.

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Fast-forwarding to today, the structural constraints that justified payment card consortiums simply do not exist with stablecoins.

Not Account-to-Account: Stablecoins are not an account-to-account service. Visa, MasterCard, and the more recent payment consortiums pursued by banks in the US, Zelle and RTP, operate on an account-to-account basis. Although such systems do not have to be operated on a consortium model (indeed, a consortium may be a constraint), some amount of cooperation among participants is essential.

No Regulatory Barriers to Nationwide Expansion: Federal and state chartered banks face few constraints on the ability to offer services nationwide. There may be some uncertainty about exactly how individual banks can support stablecoins—e.g., hold deposits from existing issuers, issue through such providers, or issue their own cousin. But banks are free to collaborate on those issues without jointly owning and operating any particular project

Technology Enables Different Scaling Models: Stablecoins are a native digital substitute for negotiable instruments. They can be accessed wherever the internet exists (and, under certain implementations, even where it does not). In the 1960s, banks needed to meet merchants in person to sign them to accept cards, and the underlying transaction records were entirely paper based. Blockchain infrastructure does not require the same physical network coordination.

Leveraging Existing Technology: Unlike the 1960s, when no national payment infrastructure existed, banks today can leverage existing stablecoin protocols and platforms without building from scratch.

Different Network Effects: Although stablecoins benefit from network effects, these operate differently than card networks. Token interoperability and protocol adoption do not require the same coordinated governance structures. Today’s existing stablecoin issuers—e.g., Circle, Tether, Paxos—do not need to coordinate with one another to offer stablecoins.

From: From Bank Cards to Stablecoins: Let’s Learn from History, not Repeat It.

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The GENIUS Act will fundamentally alter this dynamic. It will accelerate the use of stablecoins in a multitude of real economy use cases, sparking a fight for dominance among a new class of regulated issuers. In this new landscape, I believe US banks are best placed to capture and dominate existing payment flows (like trade finance and remittances) by integrating stablecoins into their current offerings. The more nimble, non bank issuers are set to lead the charge in the new, edge use cases where legacy systems do not exist.

From: Genius Law – What to Expect? | Noyes Payments Blog.

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One of the last places we might expect artificial intelligence to show up is the tattoo parlor, with its mix of artistry, personal expression and permanent ink. But a high-end ink shop in New York City is now taking appointments for an AI-driven tattoo robot.

From: Meet the Robot Using AI to Ink Your Next Tattoo – WSJ.

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